II.  Derivatives Market

II. Derivatives Market Derivatives market facilitates the trading in financial instruments such as futures contracts and options used to help control financial risk. The instruments derive their value mostly from the value of an underlying asset that can come in many forms – stocks, bonds, commodities, currencies or mortgages. Gilt-Edged Market also known as Government Securities market is the market for Government and semi-Government securities. An important feature of the securities traded in this market is that they are stable in value and are much sought after by banks. • Guaranteed return on investments • No speculation in securities • Institutional based investors which are compelled by law to invest a portion of their funds in these securities. • Predominated by such institutions as LIC, GIC, PFs and the commercial banks • Heavy volume of transactions necessitating negotiation of each transaction